A hearing on Lexar’s request for an injunction barring U.S. impor...

16 in Cal. Superior Court, Santa Clara, but the judge on the case broke an arm, Mcgee said. Earlier this year a superior court jury capped a 6-week trail by awarding Lexar $465.4 million, upon finding Toshiba stole flash-related trade secrets involving CompactFlash, Secure Digital, xD and NAND. Lexar sued in Nov. 2002, alleging theft of trade secrets and breach of fiduciary duty in connection with Toshiba’s 1997-1999 representation on Lexar’s board. Later, with Lexar rival SanDisk, Toshiba formed the Flash Vision joint venture, which operates a factory in Japan. The jury awarded Lexar $255.4 million in damages for Toshiba’s alleged misappropriation of trade secrets; $58.7 million for breach of fiduciary duty; $8.2 million in pre-judgement interest; and $84 million in punitive damages. “We're going to pursue this aggressively,” Mcgee said. A separate infringement suit in U.S. Dist. Court, San Francisco, involving 9 patents is set for trial in early 2006, he said. Toshiba originally sued in Nov. 2002, seeking to have Lexar’s patent declared invalid. Lexar volleyed with counterclaims. The case also involves Toshiba customers Fuji, Memtek and PNY. Toshiba later withdrew its claim that Lexar’s patent was invalid, but in Jan. 2003 filed a separate suit, alleging Lexar products infringed Toshiba patents. Meanwhile, Lexar, which has a brand licensing agreement with Kodak, expects Kodak- branded flash memory cards to account for about 20% of its total revenue by year-end. That’s up from less than 10% of $232.4 million in revenue in the first quarter, Mcgee said. The increase will come from expanded distribution. Lexar sells Kodak branded cards through 23,000 storefronts worldwide, largely in the food, drug and mass distribution channels, he said. CE retailers have been less willing to carry the line, preferring to sell higher-speed cards, he said. Retail accounted for 85% of Lexar’s first-quarter revenue, which included sales through 67,000 storefronts, up 2,000 from the 4th quarter, Mcgee said. Lexar’s OEM business, which includes deals with Dell and Viking for flash drives, accounted for the other 15% of revenues, Mcgee said. Lexar also recorded $800,000 in licensing and royalty revenue in the first quarter, largely from an April 2001 agreement with Samsung. Under that contract, which runs through March 29, 2006, Lexar buys most of its flash memory from Samsung.